Home sales fell 20% in December quarter of FY17: PropTiger report

In absolute terms, sales shrank from 54,721 units in September quarter to 43,512 units

Home sales across top nine cities of the country declined by 20 per cent in Q3 FY’17, compared with a four per cent fall in the previous quarter, showed a new study on Saturday.

In absolute terms, sales shrank from 54,721 units in the September quarter to 43,512 units in the December quarter.

The pace of decline witnessed during the quarter is the highest in the past 12 quarters, said PropTiger’s ‘Realty Decoded’ report for the October-December quarter of the financial year 2016-17.

The report further said that the monthly average residential sales and launches before demonetisation, during the July-October period, had been at around 19,000 units and 18,000 units, respectively. These were affected drastically on account of the government's move to demonetise high-value currency notes.

The monthly average sales and launches reduced sharply by 40 per cent and 49 per cent during November and December, respectively. The average drop in sales for the quarter, however, was at 20 per cent on account of strong performance witnessed during the month of October.  

Gurgaon, Noida and Ahmedabad showed a 30 to 40 per cent decline in sales in Q3 FY’17 on a quarter-on-quarter basis, while Mumbai, Hyderabad, Bengaluru and Chennai witnessed around 20 per cent fall in sales during the same period. Kolkata and Pune recorded the lowest level of decline at eight per cent and 12 per cent, respectively, it said.

Thus, the total launches in Q3 FY’17 decreased by eight per cent on the quarterly basis to reach 43,253 units in Q3 FY’17, compared with 47,032 units in Q2 FY’17, indicating a reduction in the activity levels across all the primary residential markets. The study covered the nine key Indian cities of Mumbai, Pune, Noida, Gurgaon, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.

According to the PropTiger study, Mumbai, Pune and Bengaluru contributed nearly 60 per cent to the total absorption witnessed in Q3 FY’17. Pune and Mumbai contributed the most to sales, each accounting for nearly 21 per cent of the total sales during the quarter followed by Bengaluru at 17 per cent, during Q3 FY’17. 

The affordable segment has accounted for approximately 54 per cent of the cumulative sales witnessed across the top nine cities during the quarter. The announcement of the affordable housing segment being given infrastructure status is likely to result in increased participation from the private players. A slew of tax measures, including those related to a reduction in the personal income tax between Rs 2.5 and Rs 5 lakh bracket, a reduction in the holding period for capital gains tax, a change in the base year for LTCG indexation are likely to spur demand from end-users and investors.

The report also highlights that Hyderabad saw the highest annual price appreciation of eight per cent in Q3 FY’17, closely followed by Bengaluru and Chennai at three per cent each. Around 80 per cent housing demand in major cities is coming from the end-users. This, coupled with high inventory stock is expected to keep the prices range-bound in the coming few months.